Patent Attorney and Founder
Hi, I’m J.D. Houvener, your host of the Bold Today Show, where you, the adventurer, entrepreneur, or business owner, get your daily dose of inspiration to make the world a better place. Yesterday, we talked about a different way to make money, right—licensing. Today, we’re going to talk about selling. But before we get there, I want you to think about patent licensing.
Patent licensing is a way for one component manufacturer to actually get to the final product in the consumer’s hand. Think about even small components and how they might need to be licensed by a larger manufacturer that needs those little components to make the final product. Can you put down an interesting example for all of us to read through as you start to think about how this product, maybe a remote control or a computer or a cell phone, is actually made up of hundreds of licensing agreements with those little tiny components inside of them? Whether it be memory, cameras, or maybe a circuitry that needs to be created from another vendor, they had to get a license to put that in their final product that made it on the shelves and into the consumer’s hand.
So, this third day of our series on how to make money in patents is all about patent selling—selling the patent outright, making it a clean escape. There’s a very, very probably simplest way to transact a patent, and it is a 100 percent sale. Now, a true 100 percent sale of a patent is actually quite rare. Usually, what comes with it is a license back to the original inventor. It gives a couple of things for the original inventor. It enables them to tinker around with that original invention and gives them the right to create derivative works and keep on making it. So, they can kind of think about future innovations. It’s a wonderful way to structure the deal so that if that inventor comes up with the next generation, the next version of that invention, they can also sell that to the same person that bought the underlying patent.
Secondly, if they ever wanted to make the same product just for their own use, if they really figured out that it was good for their own company, they could certainly keep on using it without having to seek a license from the company they just bought it from. It saves in having to do just one transaction as opposed to having to do a sale then do a license. It all happens as part of one agreement.
As I touched on yesterday a little bit with licensing, with sale, some people get confused with selling the actual patented product. Quite different, right? Selling the patent means you’re giving up all rights to excluding others to make, use, sell, or import to someone else. You’re assigning those rights to another party, whereas just selling a product under your own patent is certainly very different.
So, as long as that’s clarified, I’m happy. If you learned anything today, if you want to forward this onto someone who might be curious about patent law, please send us along. Pay it forward. I’m your host J.D. Houvener, and I hope you all have a wonderful day. Go big, go bold.
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